What Are Neobanks and How They Embrace Digital Currency

Neobanks became a transformative force in the banking world, offering fully digital financial services that resonate with the crypto-savvy generation. These digital-only banks operate without physical branches and leverage modern technology to deliver banking through sleek mobile apps and online platforms. As cryptocurrencies gain mainstream interest, many neobanks are integrating crypto features, blurring the line between traditional finance and digital assets.

In this article, we’ll break down what neobanks are, how they differ from traditional banks, the various types of neobank models, and their growing links with crypto. We’ll also explore why neobanks arose, their pros and cons, notable examples worldwide, regional regulatory nuances, and what the future may hold for these fintech innovators in the evolving crypto-fintech ecosystem.

1. What Is a Neobank? – Definition and Overview

A neobank (or “new bank”) is essentially a bank that exists entirely online without any brick-and-mortar branches. Unlike traditional banks with physical locations, neobanks offer banking services exclusively through digital channels such as mobile apps and web interfaces. They provide many of the same core services as old-school banks – checking (current) accounts, payments, savings, and sometimes loans – but with a mobile-first user experience. Neobanks often incorporate features like real-time balance updates, spending notifications, budgeting tools, and AI-driven insights that appeal to tech-savvy users. By avoiding the overhead costs of branches and tellers, neobanks can typically charge lower fees and offer more attractive rates than legacy banks.

Importantly, neobanks are a subset of what are sometimes called “challenger banks.” While traditional banks have also added digital services, neobanks differentiate themselves by being born digital – they have no legacy infrastructure. The term “neobank” itself comes from the Greek neo, meaning “new,” highlighting that these are new kinds of banks built for the internet era. Most neobanks operate under fintech company structures; they often partner with licensed banks or obtain specialized licenses rather than holding full banking charters from day one. This allows them to offer banking-like services while using innovative tech stacks and agile development. In summary, a neobank is a digital-native financial service provider delivering a banking experience through your smartphone or laptop, typically emphasizing convenience, low fees, and modern features.

2. Neobanks vs Traditional Banks – Key Differences

Neobanks differ from traditional brick-and-mortar banks in several fundamental ways:

No Physical Branches: The most visible difference is that neobanks have no branches or ATMs of their own. All interaction – opening an account, customer service, deposits, payments – happens via a mobile app or website. This branchless model dramatically reduces overhead costs (rent, teller staff, utilities). Traditional banks spend a lot on maintaining physical locations, while neobanks only maintain servers and software. As a result, neobanks can afford to offer lower fees or even free basic accounts, and often give higher interest on deposits. In contrast, incumbents often charge maintenance fees and have less attractive rates, partly due to their higher operating costs.

Technology and Infrastructure: Neobanks are built on modern cloud-based infrastructure with agile software development practices. They deploy updates frequently, use microservices architectures, and leverage advanced tech like AI chatbots for support. Traditional banks often run on decades-old core banking systems and have complex, layered IT systems that are costly to change. This gives neobanks an edge in innovating quickly – adding new features or integrations relatively faster. Incumbents, on the other hand, must carefully manage tech “debt” and maintain older systems (sometimes leading to slower digital innovation).

Business Model and Services: Most neobanks start by focusing on a few core services (like a checking account with a debit card) delivered with excellent user experience, rather than a full suite of offerings. Over time they expand their product range. Traditional banks typically offer a broad array of products (loans, mortgages, credit cards, insurance, investments, etc.) under one roof. Neobanks initially tend to be lean and specialized, sometimes targeting specific customer niches or needs. For example, many began with just a prepaid card and budgeting app, then later added savings accounts or lending. This focus allows a slick experience in their niche, whereas incumbents may have more comprehensive services but sometimes with friction in user experience.

Regulation and Licensing: A crucial behind-the-scenes difference is how neobanks are regulated. In many cases, neobanks do not hold a full banking license themselves when they launch. Instead, they partner with regulated banks to hold customer funds or use e-money licenses or other fintech charters to operate. For instance, a neobank might be a fintech company that parks deposits at an FDIC-insured partner bank (common in the U.S.), or holds an e-money institution license in Europe to manage payments. Traditional banks, by definition, carry full banking licenses and must meet strict capital requirements, reporting, and oversight as a bank. Neobanks operating without their own charter still have to comply with financial regulations (through their partner agreements or limited licenses), but the arrangement can cause differences. For example, U.S. regulators have forced some fintechs like Chime to clarify “Chime is not a bank” since they aren’t chartered – Chime offers banking services via partner banks. In Europe, some neobanks have obtained full banking licenses (N26, Monzo, etc.), while others started under lighter electronic money licenses and later pursued full charters. Overall, neobanks face the same regulatory standards for consumer protection and security, but often start under alternative frameworks or sandboxes.

Customer Experience and Accessibility: Neobanks pride themselves on a streamlined customer experience. Opening an account can be done from your phone in minutes, with digital KYC (e.g. scanning your ID and taking a selfie for verification). Traditional banks usually require more paperwork or visiting a branch to open certain accounts. Neobanks also provide 24/7 in-app chat support or AI assistance, whereas traditional banks might rely on business-hour call centers or in-branch help. For many users (especially younger, tech-oriented customers), the convenience and UX of neobanks outshines the in-person service model of traditional banks. On the flip side, people who value face-to-face service or need complex advisory (say for a mortgage) might prefer a traditional bank’s approach. Additionally, neobanks are often more accessible to the underbanked – those who might get denied by traditional banks due to strict criteria – by offering no-minimum accounts or tools for those without a credit history.

In summary, neobanks differ from traditional banks in how they operate (digital vs physical, new tech vs legacy systems) and in what they offer (focused products, low fees, slick UX vs broad products and physical presence). Both have to play by regulatory rules, but neobanks have found creative structures to enter the market and challenge the incumbents on cost and experience.

3. Types of Neobanks – Standalone vs. Partnered Models

Not all neobanks are built the same. Broadly, we can categorize neobanks into two main types based on their operational model and licensing approach:

Full-Stack (Standalone) Neobanks: These are neobanks that operate as independent, fully licensed banks – essentially handling both the customer-facing side and the banking back-end. A full-stack neobank has obtained its own banking license (or equivalent, such as a national bank charter) and can hold customer deposits directly, under regulation. They control the entire tech stack: the app/interface (front-end) and the core banking infrastructure (back-end). Full-stack neobanks can therefore offer a wider range of services in-house because they aren’t dependent on a third-party bank for core operations. Examples include N26, Monzo, Starling Bank, and others that went through the rigorous process to become licensed banks. These banks are “standalone” in the sense that they are the bank – your deposits sit with them and are typically insured by the relevant deposit guarantee scheme in their jurisdiction. Full-stack neobanks have more control and potentially more profit opportunities (they can lend out deposits, etc.), but also shoulder higher regulatory burdens and capital requirements.

Front-End Focused (Partnered) Neobanks: These neobanks emphasize the customer interface and experience, while partnering with one or more traditional banks behind the scenes to actually hold funds and handle regulated functions. In this model, the neobank does not have its own banking license; instead, it relies on a chartered banking partner (or uses a Banking-as-a-Service platform) for the heavy lifting of core banking. The neobank’s app is essentially a modern skin on top of a sponsor bank’s infrastructure. For customers, the experience still feels like dealing with one entity (the neobank’s brand), but legally their account might be housed at an underlying bank. A classic example is Revolut’s early model – for years, Revolut did not have a full banking license and instead operated with an e-money license and partnerships to offer accounts. Many U.S. neobanks follow this approach as well; Chime, for instance, is a fintech that partners with FDIC-insured banks (like The Bancorp Bank and Stride Bank) to provide the actual deposit accounts. These front-end neobanks excel at UX, features, and niche marketing, while outsourcing the regulated part to established institutions. The benefit is a faster go-to-market and lower barrier to entry (no need to meet bank capital requirements upfront). The downside is dependency – they must share revenue with partners and have less flexibility in product design (subject to partner’s capabilities and regulatory limits).

Another way to label these categories is “full-stack” vs. “light-stack”. Full-stack neobanks build or own the core banking system; light-stack (front-end only) neobanks are basically financial services apps layered on another bank’s license. With the rise of Banking-as-a-Service (BaaS) providers, the front-end model has become very common – fintech startups can plug into API platforms that offer banking features out-of-the-box. This has enabled a proliferation of niche neobanks (for specific communities or needs) without each needing to be a fully licensed bank from scratch.

It’s worth noting that some neobanks evolve from one model to the other. For instance, Revolut started as a front-end app (an e-money institution) and later acquired banking licenses in multiple countries to become more full-stack. In the U.S., SoFi (an online lending and banking firm) obtained a bank charter in 2022 by acquiring an existing small bank, transitioning from just a fintech platform to a regulated bank. Thus, the line can blur over time. But understanding these two archetypes helps: one is “we built a new bank from the ground up”, the other is “we built a cool app and partnered with a bank under the hood”.

4. Why Neobanks Emerged – Historical Context and Drivers

Neobanks emerged out of a perfect storm of factors in the late 2000s and 2010s: technological innovation, shifting consumer expectations, disenchantment with traditional banks, and regulatory encouragement for new players in finance.

Post-2008 Financial Crisis Trust Gap: The global financial crisis of 2008 severely shook public trust in big banks. As incumbent banks focused on repairing balance sheets and dealing with new regulations, consumers grew increasingly frustrated with high fees and poor customer service. Regulators in some regions also wanted to increase competition in banking to prevent “too big to fail” scenarios and spur innovation. For example, the UK undertook reforms to make it easier for new banks to get licenses after 2010, and the EU introduced policies to open up banking (like PSD2, discussed below). This created an opening for startups to reimagine banking from scratch.

Advancements in Technology: The late 2000s and 2010s saw an explosion of smartphone usage, high-speed mobile internet, and cloud computing. Suddenly, delivering services purely via apps became feasible and scalable. Fintech entrepreneurs realized that banking services could be delivered through a phone just as music or shopping had been. The cost of building and running a basic banking platform in the cloud is a fraction of operating physical branches. Technologies like APIs allowed integration with various service providers (KYC verification, payment networks) relatively easily. Cybersecurity also improved, easing fears around digital money management. This tech foundation lowered barriers for new entrants – a small startup could create an app and, by using third-party banking infrastructure, launch a quasi-bank service without the heft of an old bank’s IT department.

Changing Consumer Expectations: A new generation of customers (Millennials and Gen Z), raised in the era of instant apps and on-demand services, began to demand the same convenience from banking. They were comfortable doing everything on their phones and less inclined to visit bank branches. These users valued 24/7 access, real-time updates, and personalization. Traditional banks often failed to meet these expectations with clunky online interfaces or 9-to-5 branch hours. Neobanks seized this opportunity by crafting user-friendly, mobile-first experiences tailored to younger demographics and digital natives. Features like emoji-laden notifications for spending, in-app budgeting charts, and quick sign-ups appealed to those who found legacy banking interfaces outdated or unfriendly.

Fintech Boom and Investment: The 2010s saw a wave of fintech startups across payments, lending, and personal finance. Venture capital flowed into fintech, enabling ambitious projects like launching new banks. Entrepreneurs believed they could “unbundle” the bank – offering a superior stand-alone product (like just a prepaid card with no fees) – or even rebuild the entire banking model in a customer-centric way. Success stories of early digital finance apps (like PayPal, or M-Pesa in Kenya for mobile money) further proved that non-traditional players can handle money at scale. As investors poured money into challenger banks, it fueled rapid growth and marketing, helping these upstarts gain millions of users quickly, something that might have taken decades for a traditional bank.

Regulatory Changes and Open Banking: In some regions, regulators actively paved the way for neobanks. In Europe, the Revised Payment Services Directive (PSD2) required banks to open up APIs to third parties, enabling fintechs to build services on top of bank data. This “open banking” initiative allowed neobanks and fintech apps to aggregate data from customers’ accounts at other banks, leveling the playing field and fostering competition. The UK’s regulators (the FCA and PRA) created a more favorable regime for new bank license applications around 2014, which led to the birth of multiple UK neobanks. In Australia and Hong Kong, authorities issued new digital bank licenses for the first time in decades (around 2018–2019), explicitly to encourage innovation. Such regulatory support lowered some barriers for credible tech startups to enter the banking market.

Addressing Underserved Segments: Many neobanks identified that traditional banks were underserving certain groups – whether it be young people, freelancers, small businesses, or people in countries with oligopolistic banking sectors. For instance, Nubank in Brazil launched in 2013 because Brazilian banks were charging very high fees and offering poor service; millions of Brazilians, especially younger consumers, flocked to Nubank’s no-fee, app-based credit card and account, making it the largest neobank in Latin America. Neobanks often targeted the “underbanked” or those dissatisfied with banks, offering simpler onboarding (no hefty paperwork or minimum balances) and inclusive features. By tapping into these unmet needs, neobanks rapidly grew. In 2018, the global neobank market was worth about $18.6 billion and was projected to grow at an astonishing 46% CAGR, reaching nearly $400 billion by 2026 – a sign of the huge demand they were fulfilling.

In summary, neobanks emerged from the confluence of distrust in incumbents, mobile technology ubiquity, new consumer demands, and supportive regulatory tweaks. They started as a refreshing alternative: banking that’s as easy as texting, with transparent fees and modern features. Their rise has been particularly strong in the 2015–2022 “boom phase” of fintech, where dozens of neobanks launched globally each year. While not all have survived or thrived, the ones that did have collectively attracted well over 300 million customers worldwide by the mid-2020s, validating the reasons they came into being.

5. Pros and Cons of Neobanks for Consumers and Businesses

Like any innovation, neobanks come with distinct advantages and disadvantages. Here’s a look at their pros and cons for users (and, by extension, for businesses who use neobanks or partner with them):

Pros (Advantages):

Convenience and 24/7 Access: Neobanks allow you to do all your banking from your phone or computer at any time. There’s no need to visit a branch – you can open accounts, transfer money, pay bills, and more from anywhere. This around-the-clock availability is a huge plus, especially for those who are busy or far from physical banks. Businesses benefit too, as owners can manage finances on the go without aligning to bank business hours.

Lower Fees and Better Rates: Because they have lower operating costs, neobanks tend to have fee-free or low-fee accounts. Many neobanks charge no monthly account fee, no (or lower) overdraft fees, and offer free or cheap foreign transactions compared to traditional banks. They often provide higher interest on savings as well. This can translate to significant savings for consumers. For small businesses or freelancers, neobanks can reduce the cost of banking (e.g., no fees for basic business checking, or low FX fees for international payments).

User-Friendly Interfaces: Neobank apps are typically very intuitive, with clean design and easy navigation. They often include personal finance tools like spending categorization, budgeting features, and goal-based savings “pots.” Instant notifications for transactions help users stay on top of their money. This focus on excellent UX makes banking less intimidating and more engaging, particularly for those who might find traditional online banking clunky or confusing.

Innovative Features: Neobanks pioneered features that were later adopted by some incumbents. Examples include real-time spending alerts, integrated budgeting charts, automatic saving rules (round-ups), virtual cards for online shopping, and easy card controls (freeze/unfreeze card from the app). Some offer unique perks like cashback deals, crypto trading (more on this later), or early access to paychecks. These innovations deliver added value beyond just storing money. For businesses, certain neobanks offer handy tools like instant invoicing, expense management for employees, or integrations with accounting software – all within a digital dashboard.

Fast and Easy Account Setup: Signing up for a neobank is usually remarkably quick. You download the app, enter your info, upload ID documents, and often get an account ready to use within minutes (after identity verification). There’s no tedious paperwork. This is a boon for consumers who want a hassle-free experience. For entrepreneurs and startups, being able to open a business account online without a lengthy vetting process is extremely convenient, speeding up time to start operating.

Financial Inclusion: Neobanks have lowered barriers to banking for many. People who might have been turned away by traditional banks (due to no credit history, lower income, or lack of local branches in their area) find neobanks more accessible. Many neobanks don’t require a minimum balance and have straightforward requirements, welcoming segments like students, gig economy workers, or the previously unbanked. By focusing on mobile delivery, neobanks can reach remote or underserved areas as long as there’s internet connectivity. In emerging markets, neobanks and fintech apps have brought millions into the formal financial system for the first time.

Transparency and Control: Generally, neobanks pride themselves on transparent pricing and easy control over your finances. Apps often show clearly any fees before you confirm a transaction. You can often self-service tasks that would require contacting support at a traditional bank – for example, adjusting your card’s spending limits, or categorizing transactions. This empowers users to feel more in control of their money, and reduces the frustration of dealing with bank bureaucracy.

Cons (Drawbacks):

Limited Product Range (at least initially): Most neobanks started with a narrow offering – perhaps just checking accounts and debit cards. Many still do not offer complex products like mortgages, extensive loan options, or investment products (unless through third parties). So if you need a full suite of financial services under one roof, a neobank might not (yet) fulfill all those needs. Some neobanks have added offerings over time or partnered for things like insurance or loans, but it can lead to a fragmented experience when third parties are involved. Businesses might find neobanks lacking in credit facilities or merchant services that a traditional bank could provide.

No Physical Presence – Lack of Personal Touch: The absence of branches is a double-edged sword. While many enjoy not needing them, some customers do value being able to walk into a bank and speak to someone, especially for complex issues or large transactions. With neobanks, support is via chat, email, or phone. For those uncomfortable with digital interfaces or who prefer face-to-face service, neobanks can feel impersonal. Handling certain things (like notarizing documents, cash deposits, or simply getting in-person financial advice) is not possible at a neobank. This can be a drawback for people who aren’t tech-savvy or who have complicated banking needs. Businesses that handle a lot of cash, for example, might struggle with a bank that has no branch to deposit cash (though some neobanks partner with retail stores or ATM networks to facilitate cash deposits, usually for a fee).

Trust and Brand Strength: Established banks have been around for decades (or centuries) and have built trust (even if begrudging) that they will safeguard money. Neobanks are relatively new and some customers might be hesitant to keep large sums or salary deposits in a fintech-run bank. While many neobanks do insure deposits (either directly or via partner banks), the lack of a long track record can make people nervous, especially older customers. High-profile failures of a few fintechs in the past can also fuel caution. In times of financial uncertainty, consumers might retreat to the perceived safety of big traditional banks. So, a neobank has to overcome the challenge of appearing reliable despite its youth. This is improving as some neobanks have now operated for years and gained millions of users without issues, but the trust gap still exists for a segment of users.

Regulatory Grey Areas & Deposit Insurance Concerns: If a neobank is not a licensed bank itself, customers must understand who actually holds their money. In the U.S., for example, your Chime or Revolut USD account is actually held by a partner bank where it’s FDIC-insured. If the neobank’s app has a long outage or the fintech goes under, your money should still be safe at the partner bank, but the process to access it might be convoluted. In some cases, neobank users might not have full clarity on deposit protection – especially with crypto-related accounts (not government-insured) or if the neobank operates in a lightly regulated space. Neobanks also face evolving regulations; changes or crackdowns can impact their services quickly (e.g., a regulator might suddenly forbid a certain feature). In short, the regulatory setup can be complex, and while they operate legally, customers need to be aware of how their money is protected.

Customer Service and Problem Resolution: While many neobanks offer quick in-app chat support, some users have complained about difficulties in resolving issues that fall outside the norm. For example, disputing a transaction, dealing with fraud on your account, or other exceptional scenarios can be stressful without a physical branch to escalate to. Some neobanks have small support teams relative to their user base, leading to slow response times during peak issues. If your account gets mistakenly flagged for fraud (e.g., automated systems lock you out), getting it unlocked can take time when you can’t just visit a branch with your ID. This isn’t to say traditional banks are models of great service universally, but the human touch in complex problem resolution can be lacking in digital-only banks.

Reliance on Technology – Downtime Risks: Because neobanks are purely digital, if their app or website goes down due to a technical glitch, customers have no alternative way to access services during that outage. Traditional banks also have outages, but one could still withdraw cash from an ATM or visit a branch in some cases. With neobanks, app downtime means an inability to transact, which can be frustrating or even financially damaging if it occurs at a bad time. Similarly, any cyber-attack or data breach could temporarily halt services, though to their credit neobanks typically use very robust security measures (often more modern than some old banks). In essence, using a neobank means you’re highly reliant on your phone, internet, and the bank’s servers being up.

For businesses, many of the above points apply similarly. A small business owner might love the low fees and easy invoicing of a neobank’s business account, but they might miss having a dedicated relationship manager or the ability to walk into a bank to discuss a loan. A startup might use a neobank for quick account setup, but later as it scales, it may need additional services (like international trade finance or large credit lines) that neobanks don’t provide, forcing a switch to a traditional bank.

In weighing pros and cons, it often comes down to personal preference and needs. Neobanks excel in convenience, cost, and innovation; traditional banks still win on breadth of services and sometimes that tangible reassurance. Many people use a hybrid approach – keeping a neobank account for daily spending and a traditional bank for other needs. The good news is, competition from neobanks has pushed many incumbent banks to improve their own digital offerings and reduce fees, which benefits all consumers.

6. Neobanks and Crypto – How & Why Neobanks Integrated Cryptocurrency

Given the tech-forward nature of neobanks, it was perhaps inevitable that they would intersect with the world of cryptocurrencies. In the past few years, an increasing number of neobanks have started offering crypto-related services – from in-app trading of Bitcoin and Ethereum, to supporting stablecoins or even exploring their own digital tokens. Here’s how and why this integration with crypto has come about:

How Neobanks Offer Crypto Services:

Most neobanks enter the crypto space by enabling their users to buy, sell, and hold cryptocurrencies directly within the banking app. This typically takes the form of a crypto trading feature, where a user can convert a portion of their fiat balance (e.g., dollars or euros) into Bitcoin, Ethereum, or other coins, and vice versa. For example, European neobank N26 launched “N26 Crypto” in late 2022, allowing users to trade nearly 200 cryptocurrencies right from the N26 app. Behind the scenes, N26 partnered with an established crypto exchange (Bitpanda) to handle execution and custody of the coins – the user sees a seamless experience in one app, but Bitpanda provides the crypto liquidity and wallet infrastructure. Similarly, Revolut has offered crypto trading since as early as 2017; Revolut started with just a few coins and expanded over time, effectively acting as a brokerage where users can get exposure to crypto.

Neobanks typically do not become full-blown crypto exchanges themselves; instead, they integrate via partnerships or in-house teams using third-party APIs. They add a “Crypto” or “Trading” section in their app where users can see their crypto balances alongside their fiat balances, making it easy to manage both in one place. Transactions are usually instant, with fees clearly displayed (e.g., N26 charges around 1.5% for Bitcoin trades). Some neobanks even allow scheduled buys or rounding up card purchases into crypto (similar to saving spare change, but into Bitcoin). Another service some offer is crypto rewards – for instance, offering cashback in Bitcoin instead of points. Neobank ZenGo (which is crypto-focused) provides a debit card that gives cashback in crypto. In the U.S., fintech app Current experimented with giving users yield by partnering with decentralized finance (though that was a pilot).

Beyond trading, a few neobanks have explored supporting stablecoins, which are cryptocurrencies pegged to fiat currencies. In 2023, reports emerged that Revolut was considering launching its own stablecoin tied to the value of a fiat currency. While as of this writing Revolut hasn’t released a stablecoin, the fact that a major neobank is exploring it underscores the link-up: a stablecoin issued by a neobank could allow instant global transfers among its users, or integration into crypto payment networks. Some neobanks already let users hold and send stablecoins; for example, Bankera (a smaller European digital bank) offers crypto wallets with stablecoin support.

Why Neobanks Are Embracing Crypto:

Several factors are driving neobanks to integrate crypto services:

Customer Demand and Demographics: The user base of neobanks skews younger and more tech-savvy – the very demographic that is most interested in crypto investing. These customers were likely going to crypto exchanges or apps anyway. By offering crypto directly, neobanks keep those users engaged in their ecosystem and meet their needs. For instance, Bunq, a Dutch neobank, noted strong customer demand for crypto investments, which prompted it to add crypto trading in 2023 via a partnership with Kraken. Essentially, neobanks don’t want to risk users leaving their app to use a crypto platform; offering it in-app provides convenience (and retains users).

New Revenue Streams: Many neobanks are still on the path to profitability and are looking for additional revenue sources. Crypto trading can be lucrative, as exchanges typically earn through trading fees or spreads. By enabling crypto buying/selling, neobanks can earn a fee on each trade. For example, N26 shares revenue with Bitpanda for trades made in its app. In the case of Revolut, crypto trading turned into a significant revenue contributor during boom times – Revolut’s “Wealth” division (which includes crypto trading) saw revenues grow 300% year-on-year, largely driven by crypto activity. In 2024, Revolut’s profits surged, with a substantial boost from crypto exchange use by its customers. This demonstrates that offering crypto helped some neobanks monetize their user base more effectively (especially during crypto bull markets when trading volumes are high).

Differentiation and Competitive Edge: As more fintech apps crowd the market, offering crypto is a way for a neobank to differentiate its product. A few years ago, having crypto functionality was novel and could attract media attention and early adopters. Even today, not all neobanks provide crypto services – so those that do can market themselves as forward-thinking or a “one-stop-shop” for finance. It aligns with the innovative brand image that neobanks cultivate. For example, Wirex is a fintech that started as a crypto-friendly digital account and gained users by targeting crypto enthusiasts who wanted a debit card to spend their crypto.

Enhancing User Experience (All-in-One Finance App): From a user’s perspective, it’s inconvenient to manage many separate apps for different financial needs. Neobanks are in a race to become the primary financial app for their customers. Adding crypto means users can see their Bitcoin alongside their bank balance, trade seamlessly, and even cash out crypto gains back to fiat in the same app. This convenience is highly valued. For instance, with N26’s integration, when users sell crypto it goes straight back into their bank account balance – no need to transfer money from an external exchange back to your bank. Such tight integration simplifies crypto investing for newcomers who might be intimidated by standalone crypto exchanges.

Bridge Between Traditional Money and Digital Assets: Neobanks often position themselves as bridging old and new financial systems. Crypto is an emerging asset class; by integrating it, neobanks strengthen their role as the bridge for users to seamlessly move between fiat and crypto. They handle the complex parts (custody, compliance) via partners, and present a friendly interface to the user. This is especially powerful for enabling things like cross-border remittances using crypto (senders convert fiat to crypto, move it, recipient converts back – all within one app). Some neobanks in developing markets see crypto as a way to offer cheaper international transfers or hedge against local currency inflation using stablecoins.

Future-Proofing and Innovation: From a strategic standpoint, neobanks don’t want to be left behind as financial technology evolves. Crypto and blockchain innovations like decentralized finance could disrupt banking further. By getting involved early, neobanks can learn and adapt. Some are experimenting beyond just trading: a few neobanks have looked at giving crypto custody solutions (safekeeping of digital assets) or enabling customers to earn yield on crypto holdings through partnerships. While regulatory uncertainty still limits some of these offerings, neobanks are preparing for a world where digital assets might become a routine part of finance.

Examples of Neobank Crypto Offerings:

Revolut: One of the first movers, it started offering crypto trading in 2017. Revolut users can buy, hold, and sell dozens of cryptocurrencies. While initially users couldn’t withdraw crypto to external wallets (it was more like trading IOUs), Revolut has since allowed certain crypto withdrawals. In 2023, Revolut even launched its own crypto exchange and was exploring creating a Revolut stablecoin. Crypto trading is cited as a big contributor to Revolut’s recent revenue growth.

N26: Launched N26 Crypto in partnership with Bitpanda in 2022. It started in Austria and rolled out to more European markets, allowing easy trading of ~100 tokens. N26 emphasized the benefit that users don’t need a separate account – it’s all integrated.

Bunq: In 2023, Bunq partnered with U.S.-based exchange Kraken to offer crypto investments to its European users. Bunq integrated Kraken’s crypto-as-a-service toolkit so that users could open a crypto account “in seconds” and trade 20+ coins inside the Bunq app. This move came alongside Kraken launching a broader service to enable banks/fintechs to provide crypto to clients.

Cash App: While not a bank in the traditional sense (it’s a payment app with banking features), Cash App (by Block, Inc.) has been a major player in bringing Bitcoin to mainstream audiences in the US. It allowed Bitcoin buying/selling since 2018 and even supports Bitcoin Lightning Network payments now. Many consider Cash App’s crypto offering a template that neobanks followed.

PayPal: Again, not a neobank per se, but worth mentioning – PayPal (which has a huge digital finance user base) enabled crypto buying/selling in 2020 and in 2023 launched its own U.S. dollar stablecoin (PYUSD). This highlights the trend of major fintech platforms diving into crypto.

Xapo Bank: An interesting case, Xapo was originally a Bitcoin wallet provider that evolved into a fully licensed private neobank. It now offers USD and EUR accounts and also crypto services – even paying interest on deposits in either USD or stablecoins. It’s an example of a crypto-native company entering banking, which is the flip side of banks entering crypto.

Overall, the integration of crypto into neobanking is still unfolding. Not every neobank has embraced crypto (some are cautious due to regulatory issues or skepticism – for instance, UK’s Starling Bank took a strict stance against crypto transactions citing fraud concerns). But a growing number see it as aligned with their digital innovation mission. They are effectively becoming crypto-friendly banks, aiming to be the place a user manages both old money and new money. This trend also reflects broader convergence in fintech: exchanges like Coinbase are adding bank-like features (debit cards, direct deposit), while neobanks add exchange-like features. The endgame could be a unified financial super-app where crypto is just another part of one’s portfolio – and neobanks are positioning to be that app.

7. Neobank–Crypto Partnerships – Notable Examples

As neobanks venture into crypto, many have formed partnerships with established crypto companies to leverage each other’s strengths. These collaborations allow neobanks to offer crypto services without having to build secure trading platforms from scratch, and they give crypto firms access to large user bases of fintech apps. Here are some notable partnerships between neobanks (or fintech banks) and crypto platforms:

N26 and Bitpanda: One high-profile partnership is between German-origin neobank N26 and Austrian crypto exchange Bitpanda. Announced in 2022, this partnership powers N26’s in-app crypto trading feature. Bitpanda’s infrastructure handles trade execution and custody of assets, while N26 provides the interface and banking integration. This has enabled N26 to offer nearly 200 cryptocurrencies to its 8 million+ users without directly dealing with the complexities of crypto custody. It’s a symbiotic arrangement: N26 can expand its product offering (and earn commission on trades), and Bitpanda gains a large funnel of retail users trading crypto through a familiar bank app. This model has been successful enough that other fintech apps (like French app Lydia) also partnered with Bitpanda for offering crypto and stocks within their platforms.

Bunq and Kraken: In April 2025, Netherlands-based neobank Bunq revealed it teamed up with Kraken, one of the world’s largest crypto exchanges, to launch Bunq’s crypto service. Through this partnership, Bunq users in select European countries can create a crypto account almost instantly and trade 20+ major cryptocurrencies in-app. Kraken provided a Crypto-as-a-Service solution (called “Kraken Embed”) that Bunq integrated. This allowed Bunq to go live with crypto trading quickly, riding on Kraken’s secure trading engine and compliance framework. The partnership was mutually beneficial: Bunq met user demand for crypto investments, and Kraken showcased its plug-and-play solution for fintechs with Bunq as a flagship example. It’s worth noting Bunq’s positioning – they framed it as having “everything you need to save, spend and invest – including crypto – on one platform”. This indicates how central crypto has become in marketing a complete financial hub.

Revolut and Paxos: Revolut initially did most of its crypto offering in-house, but there were reports that in the U.S. market Revolut partnered with Paxos (a regulated crypto brokerage API provider) to offer crypto trading in compliance with U.S. regulations. Paxos provides the underlying liquidity and custody, while Revolut handles the UX. This wasn’t heavily marketed, as Revolut positions the feature as native, but partnerships like these are common behind the scenes. Similarly, other U.S. fintechs like Wealthfront and Interactive Brokers partnered with Paxos to offer crypto.

Chime and Crypto Exchanges: Chime (the U.S.’s largest neobank) hasn’t directly launched crypto trading, but it did allow connectivity with external crypto apps. For instance, Chime users can link their accounts to Coinbase or Gemini to fund crypto purchases. In some sense, the partnership is indirect – via open banking APIs that let crypto exchanges verify Chime accounts for ACH transfers. While not an official co-branded integration, it shows neobank and crypto platforms interlinking for user convenience.

Visa and Crypto Rewards Fintechs: Several neobanks or fintech card programs have partnered with crypto platforms through Visa’s network. For example, Crypto.com and Coinbase launched their own Visa debit cards (letting users spend crypto via a card), which isn’t exactly a neobank partnership, but blurs lines between a crypto company and banking services. There are also fintech credit cards that give rewards in Bitcoin (e.g., BlockFi’s card, or Gemini’s card), effectively acting like neobank offerings with crypto tie-ins, done in partnership with card issuers and crypto brokers.

Traditional Banks’ Digital Arms and Crypto: We also see partnerships in cases where an incumbent bank’s digital-only spin-off integrates crypto. For example, Marcus (Goldman Sachs), while not offering crypto to retail, partnered with Coinbase to manage some of its operations and considered crypto offerings through its consumer app. In the Asia-Pacific context, Revolut partnered with Apollo in Singapore for crypto services compliance. And in Australia, neobank Volt (before its closure) had explored partnerships with crypto exchanges to allow funds flow between accounts easily.

These partnerships generally follow a pattern: the neobank provides the customer base and user interface, while the crypto firm provides the trading engine, liquidity, and regulatory compliance for crypto transactions. This division of labor makes sense – each side sticks to its core competency. It’s similar to how many neobanks partner with banks for fiat services; here they partner with crypto specialists for digital assets.

From the user’s perspective, these tie-ups mean they can activate crypto features with a few clicks, often agreeing to some terms from the partner (e.g., Bitpanda’s terms) but without ever leaving the neobank’s app. The integration is deep enough that it feels like one service. For instance, in N26, your crypto portfolio is displayed right in the banking app interface, and you fund trades directly from your N26 account balance. In Bunq’s case, they even prepared educational materials within the app to guide new crypto investors, showing a joint effort with Kraken to make the experience smooth and informed.

It’s also notable that some partnerships extend to crypto rewards and payments. For example, fintech app Fold (a Bitcoin rewards debit card) partnered with a small bank to issue the card and with Visa’s Fast Track program, showcasing a multi-way partnership: fintech + bank + crypto. While Fold isn’t a full neobank, it behaves like one with checking and Bitcoin cashback.

Lastly, partnerships are crucial for compliance. By working with regulated crypto entities (like Kraken in Europe, or Paxos in the US), neobanks ensure that the crypto services are compliant with anti-money laundering laws and other regulations. This shields the neobank from some risk, since the partner handles KYC/AML for crypto transactions and the custody of assets in a compliant way.

We can expect more such alliances. As crypto regulation matures, more banks (neo or traditional) will feel comfortable offering crypto via partnership. Likewise, crypto companies are eager to tap into mainstream distribution – being inside a popular banking app is a great way to reach new users who might not sign up on a standalone crypto exchange. The lines between banking and crypto services are increasingly intersecting through these collaborations.

8. Top 10 Neobanks in the World (2025)

The neobanking sector has exploded globally, with dozens of players rising to prominence. Below are ten of the world’s leading neobanks (and digital-only banking platforms), selected based on their user base size, valuation, global reach, service breadth, and innovation. These are not ranked purely by one metric but collectively represent the cream of the crop in the neobank landscape as of 2025:

1. PayPal – The Global Digital Finance Giant: While some debate whether PayPal is a “neobank,” it operates as a digital-first financial platform offering payment services, bank-like wallets, and even savings and crypto trading. With 392 million active customers globally, PayPal is by far one of the largest online financial services providers. It has an $80 billion market cap and has ventured into crypto (enabling Bitcoin/ETH trading and launching its own PYUSD stablecoin). PayPal’s sheer scale and global reach (200+ markets) make it a cornerstone of digital banking for many, bridging traditional payments and modern fintech.

2. Nubank – LatAm’s Purple Superstar: Brazil’s Nubank has emerged as the world’s most valuable neobank, with a valuation around $45–$50+ billion and over 100 million customers across Brazil, Mexico, and Colombia. Renowned for its purple credit card and app, Nubank revolutionized banking in Brazil by eliminating annual fees and providing a slick mobile experience in a market previously dominated by fee-heavy banks. It has expanded into lending, investments, and insurance. Notably, Nubank embraced crypto in 2022, allowing its Brazilian users to buy Bitcoin and Ethereum in-app, reflecting its innovative edge. With backing from investors like Berkshire Hathaway, Nubank is not only huge in user count but also a bellwether for fintech success in emerging markets.

3. Revolut – The Global Fintech Super-App: Born in the UK and now serving customers across Europe, North America, and Asia-Pacific, Revolut boasts around 50 million+ users worldwide (crossing 52 million by 2024). It started with travel money and low-cost currency exchange, but today Revolut offers everything from bank accounts, stock and crypto trading, to insurance and business accounts – truly aiming to be a “super-app.” Valued at $33 billion in its last funding round, Revolut is known for rapid innovation: it was one of the first neobanks to integrate crypto trading (now offering dozens of coins), and it continually adds new features (like budgeting tools, donation features, etc.). Revolut’s global ambitions and ability to localize (it obtained bank licenses in Europe, and is pursuing one in the UK and potentially the US) put it at the forefront of the neobank revolution. It’s often cited as the closest to a global neobank, though it faces the challenge of navigating many regulatory regimes.

4. Chime – US Challenger Champion: Chime is the leading neobank in the United States, with an estimated 20+ million customers (reports indicate 22 million in 2023). Focused on simplifying banking for everyday Americans, Chime offers no-fee checking accounts, early access to paychecks, and a savings account, all through an easy app. Its viral growth and heavy marketing have made it a top fintech brand in the US, especially appealing to those fed up with monthly fees at big banks. Chime has yet to delve deeply into crypto services, likely due to a cautious regulatory environment in the US, but it has solidified its position with features like credit builder cards and a large free ATM network via partnerships. With a valuation that was around $25 billion in 2021 (though the market has fluctuated since), Chime is a standout for proving a neobank can scale in the crucial U.S. market.

5. Cash App (Square) – Payments App Turned Neobank: Cash App, developed by Jack Dorsey’s Block, Inc. (formerly Square), started as a simple peer-to-peer payment app but has evolved to offer many banking-like services. It has about 50–57 million monthly active users as of 2024 – making it hugely popular in the US. Cash App provides users with a debit card, the ability to deposit paychecks, buy stocks, and crucially, buy and sell Bitcoin (Cash App was an early adopter of Bitcoin integration). While not a bank by charter, Cash App functions as a de facto neobank for many young Americans who use it as their primary account. Its integration of Bitcoin and even the Lightning Network for payments aligns well with crypto enthusiasts. Cash App’s success underscores how a fintech app can blur the line with banking, and its parent company Block’s focus on crypto innovation keeps it at the cutting edge.

6. SoFi – From Student Loans to Financial One-Stop: SoFi (Social Finance) is a U.S.-based fintech that began with refinancing student loans and expanded into a broad suite of financial services. Now a public company, SoFi has about 10–11 million members and offers banking (SoFi Bank – it obtained a national bank charter in 2022), investing in stocks and crypto, personal and home loans, credit card, and more, all through its app. SoFi’s value lies in its ecosystem approach – users are drawn in by one product (say, a loan) and cross-sold into using SoFi Money (checking accounts) or SoFi Invest, etc. SoFi has embraced crypto by offering trading of major cryptocurrencies within SoFi Invest, making it one of the first U.S. fintechs to do so in a regulatory compliant way. With a market cap around $6–8 billion in 2025 and continuing growth in its banking division, SoFi is often highlighted as a successful “fintech to bank” story and a major neobank player in North America.

7. N26 – Pioneering European Neobank: Germany’s N26 was one of Europe’s first app-based banks, and has about 8 million customers across the EU (as of mid-decade). It’s known for its minimalist, user-friendly app and early expansion across Europe using a German banking license “passported” to other EU countries. N26 offered features like instant push notifications and Spaces (sub-accounts for savings goals) that set the standard early on. Although N26 had some setbacks (like withdrawing from the UK and US markets), it remains a dominant player in continental Europe. Valued at around $9+ billion in its last funding, N26 has continued to innovate – it introduced N26 Crypto in partnership with Bitpanda to allow crypto trading, and it’s exploring stock trading as well. N26 is often mentioned alongside Revolut as a European challenger success, though with a more European focus (fewer global ambitions than Revolut).

8. Monzo – UK’s Beloved Banking App: Monzo, famous for its coral pink debit card, is one of the UK’s leading neobanks with around 9-10 million customers by 2024. Monzo built a strong community through its beta launch and became a cultural phenomenon for a while among UK millennials. It offers personal and business accounts, lending, and has marketplace integrations for things like energy switching. Monzo hasn’t aggressively expanded internationally (a small US pilot aside), but in the UK it’s been a trailblazer for features like instant spending notifications, fee-free travel spending, and easy bill splitting. While Monzo has not focused on crypto trading services (as UK regulations and perhaps the bank’s own priorities have kept it more traditional in product scope), it has indirectly allowed connectivity with crypto apps and has been observing the space. Monzo’s recent moves into profitability (it turned a profit in 2023) and growing deposits show neobanks can mature into sustainable businesses. It’s valued around $4.5 billion (2022) and considered among the top tier of neobanks globally for its innovation and loyal user base.

9. WeBank – China’s Mega Digital Bank: WeBank, launched in 2014, is China’s first online-only bank and is backed by tech giant Tencent. It operates primarily through the WeChat super-app. With a staggering 200+ million customers (some sources even claim over 300 million), WeBank is possibly the world’s largest digital bank by user numbers. It provides consumer and SME loans, payments, and deposit services all through digital channels. WeBank achieved scale by tapping into Tencent’s ecosystem (WeChat and QQ) for user acquisition. It’s highly profitable and has inspired similar models elsewhere in Asia. While WeBank does not engage in cryptocurrency (China bans retail crypto trading and ICOs), it has been innovative in blockchain on the enterprise side and in fintech infrastructure. WeBank’s inclusion in a global top list is important to note the scale achievable in populous markets through digital banking. It might not be well-known in the West due to its exclusively China focus and the fact that it doesn’t market itself internationally, but sheer size and success make it a top neobank globally.

10. Starling Bank – The Profitable Innovator: Starling is another UK-based neobank, smaller in customer count (3+ million customers, including many small businesses) but highly regarded in fintech circles. Founded by Anne Boden, Starling took a slightly different path by focusing not just on retail accounts but also heavily on business banking and offering Banking-as-a-Service to other fintechs. Starling became one of the first neobanks to reach sustained profitability (from 2021 onwards), proving the viability of the model. It offers a full checking account with lots of features, and has marketplace integrations with third-party financial products. Starling hasn’t integrated crypto trading into its app (in fact, it was cautious, temporarily blocking crypto exchange deposits citing risk concerns in the past). However, its strong fundamentals and innovative approach to banking (like providing payments infrastructure to fintech partners) earn it a spot among the top neobanks. Starling’s success, especially in SME banking (where it has a significant UK market share in new business accounts), demonstrates that neobanks can compete in multiple segments. With a valuation around $3 billion (as of 2022) and growing, it might not be the largest, but it’s influential and often referenced as a model for building a sustainable digital bank.

(Honorable Mentions:) There are many other notable neobanks close on the heels of these ten. Wise (formerly TransferWise) isn’t a bank but offers multi-currency accounts to 16+ million users, playing a big role in cross-border finance. KakaoBank in South Korea has over 18 million users and a strong IPO debut in 2021, making it a major Asian neobank. Varo Bank in the U.S. made history as the first fintech to get a full national bank charter. And in other regions, players like Grab’s GXS Bank (Southeast Asia), TymeBank (South Africa), Yono/SBI Yono (India, via SBI), and Banco Inter (Brazil) are shaping digital banking. The top 10 list above, however, covers the most globally impactful names to date, spanning the Americas, Europe, and Asia.

9. Regulatory Considerations and Regional Differences (EU vs US vs APAC)

Neobanks operate under the shadow of banking regulations, which vary significantly by region. Regulatory frameworks determine how neobanks can launch, whether they can call themselves “banks,” how they handle crypto, and how they expand. Here’s a breakdown of the landscape in Europe, the United States, and the Asia-Pacific (APAC), highlighting key differences and considerations:

Europe (EU/UK): Europe has generally been a fertile ground for neobanks, thanks to conducive regulations and initiatives to boost competition. In the EU, regulations like the PSD2 (Revised Payment Services Directive) mandated open banking and allowed licensed fintechs to access banking data with user consent. This encouraged new entrants and collaborations. Many European neobanks started with an “e-money institution” license – which is easier to get than a full bank license – allowing them to handle payments and electronic money, but not to call themselves a “bank” or hold deposits on their own balance sheet. Examples include Revolut and Monese using e-money licenses in their early stages. However, the EU also provided pathways for full bank authorization; for instance, N26 obtained a full banking license from German regulators relatively early (2016), and others followed in various countries. An EU banking license can be passported across member states, enabling an entity like N26 or Revolut to serve many countries once authorized in one, albeit with coordination with each national regulator.

The United Kingdom, while now outside the EU, also championed challenger banks post-2010. UK regulators created a more accessible regime for new bank licenses, leading to the launch of Monzo, Starling, Atom, etc. The UK allowed a “mobilization” phase where a new bank could get an authorization with restrictions, launch in a limited way, then get fully authorized. The result was a vibrant challenger bank scene. The UK has also been updating its regulations around fintech and crypto – for instance, as of 2023-2024, the FCA has been tightening rules on crypto promotions, which could affect how integrated crypto services are marketed by fintechs.

A key consideration in Europe is use of the term “bank.” Regulators insisted that only licensed banks use that term to avoid customer confusion. This is why Revolut, which lacked a UK banking license for years, marketed itself carefully and obtained a Lithuanian banking license to call itself a bank in the EU. Similarly in the U.S., we saw Chime’s disclaimer “Chime is not a bank” enforced – a similar logic is applied in Europe. Neobanks have had to make sure their customers know who is providing the underlying protections. European deposit insurance schemes (like the EU-wide €100k guarantee per bank, or the UK’s FSCS £85k guarantee) apply to licensed banks. So if a neobank isn’t a bank, it must clarify that user funds are safeguarded via a partner bank which has the insurance.

Regarding crypto in Europe, regulation is moving toward clarity with the new MiCA (Markets in Crypto-Assets Regulation), expected to be in force by 2024/25. MiCA will create an EU-wide licensing regime for cryptoasset services. This could actually make it easier for neobanks to integrate crypto, as they’ll have clear rules to follow or partners who are MiCA-compliant. Already, European neobanks have been active (as seen with Bitpanda partnerships, etc.), but they had to navigate each country’s interpretation of EU directives. The EU is relatively open to innovation, as long as consumer protection is in place.

Regionally within Europe, differences exist: Germany’s BaFin is quite strict (N26 faced some regulatory constraints to slow growth until compliance caught up), France required some local specifics for banks, Lithuania became a fintech licensing hub, etc. But overall, the EU provides a passportable regulatory environment conducive to cross-border digital banks. The EU’s Second Electronic Money Directive also helped in establishing fintechs that aren’t fully banks.

North America (USA): The United States has a more fragmented regulatory system for banking, making life trickier for neobanks. There is no direct equivalent of a “fintech charter” (an OCC proposal for a special fintech bank charter stalled in legal challenges). This means if a fintech wants to be a bank, it must either acquire an existing bank or apply for a full national bank charter (or state charter and then get FDIC insurance). This is a tall order; only Varo Money succeeded in getting a brand-new national bank charter (FDIC-insured) as a de novo digital bank in 2020. Others like SoFi went the route of acquiring a small bank (SoFi bought Golden Pacific Bancorp) to fast-track into becoming a bank.

Most U.S. neobanks thus operate by partnering with chartered banks. They typically establish a partnership with an FDIC-insured bank that holds the deposits on behalf of neobank users. This is why Chime accounts are actually held at The Bancorp Bank or Stride Bank, why Coinbase’s USD balances are held at MetaBank, etc. The partner bank’s name is usually in the fine print and accounts are FDIC insured through them. This model works, but it means neobanks are essentially agents of existing banks from a legal perspective. U.S. regulators (OCC, Federal Reserve, FDIC, CFPB) have been keeping a close eye on these arrangements to ensure that the partner banks aren’t just “renting” out their charter without proper risk controls (so-called “rent-a-bank” concerns). In early 2023, after some crypto-related bank failures, U.S. regulators also informally cautioned banks about relationships with crypto firms – meaning a partner bank might be hesitant if a neobank heavily deals in crypto.

Additionally, the U.S. has stringent rules on bank terminology and consumer protection. The CFPB made an example of Chime by making it clarify that it is a fintech service, not a bank. Any neobank-style offering must avoid implying they are the insured institution if they are not. The patchwork of state money transmitter licenses can also come into play if a neobank isn’t a bank – many fintechs need those licenses to hold and move customer funds in each state (this is a complex area many solve by again using a partner bank’s coverage).

For crypto services in the US, regulation is in flux. Fintechs offering crypto must register appropriately (often as money services businesses) and in some cases get state-level crypto licenses (like the New York BitLicense). Some banks in the US have been very cautious due to unclear SEC/CFTC stance on various tokens. As a result, fewer American neobanks offer in-app crypto trading compared to Europe. SoFi is an outlier that does (it actually has to ring-fence its crypto business under its broker-dealer subsidiary). Traditional banks mostly stayed away from offering crypto to retail (apart from perhaps some allowing crypto funds in wealth management). The regulatory uncertainty (e.g., whether certain tokens are considered securities) makes it tricky. However, the appetite is growing – in late 2023, we saw major banks get involved in a pilot for a regulated digital asset settlement system (Canton Network) and growing institutional interest. Neobanks in the U.S. will likely expand crypto offerings if and when clearer rules (or legislation) emerge.

APAC (Asia-Pacific): The APAC region is diverse, with different countries charting different paths for digital banking:

China: As mentioned, China has giants like WeBank and Ant Group’s MYbank – both are digital banks with full licenses, but crucially, China bans cryptocurrency trading for individuals and ICOs. So Chinese digital banks do not integrate crypto in the way Western neobanks do. Instead, they’ve focused on AI, big data credit scoring, and even enterprise blockchain for backend processes (WeBank is known for its blockchain platform FISCO-BCOS used in supply chain finance, for example). Regulation in China allowed tech companies to get banking licenses (with significant capital and state oversight). The success of WeBank (400M+ users) is partly due to regulatory support for digital finance domestically while excluding foreign tech firms and keeping crypto out of retail finance.

Southeast Asia: Regions like Southeast Asia have been issuing new digital bank licenses in recent years.

Singapore in 2020 granted four digital bank licenses (to Grab-Singtel consortium, Sea Group, Ant Group, and a Greenland consortium). These digital banks started coming online around 2022–2023 (e.g., Grab and Singtel’s GXS Bank launched in 2022 in Singapore). Singapore’s regulator MAS is known for balancing innovation with strict oversight. They also have a clear licensing scheme for crypto exchanges and wallets under the Payment Services Act. It’s conceivable that Singapore’s digital banks might integrate crypto or offer tokenized deposits in the future, but initially they are focused on underserved retail and SME segments.

Malaysia awarded 5 digital bank licenses in 2022 (to consortiums involving Grab, Sea, local banks, etc.), those banks are starting operations by 2024–2025. Hong Kong issued 8 virtual bank licenses in 2019 (e.g., WeLab, ZA Bank, Mox by Standard Chartered), which have since launched and collectively acquired millions of customers. Hong Kong initially kept a separation where virtual banks did not offer crypto trading directly (though ZA Bank in 2023 started facilitating crypto-to-fiat conversions for exchange clients in a regulated trial, as HK is trying to be a crypto hub while keeping banks cautious).

India: India hasn’t issued any fully digital bank licenses yet. Regulations there still require a physical presence for banks, and fintechs typically partner with banks (similar to the U.S. model). Several Indian fintech “neobanks” (like RazorpayX, Fi, Jupiter) exist but they are front-ends on top of partner banks. The Reserve Bank of India has been conservative, citing financial stability and the large public sector bank presence. On crypto, India’s stance has been very restrictive with heavy taxes on crypto trades and earlier banking bans (since lifted by court order). So, Indian neobanks have not integrated crypto services; they focus on UX and value-adds in traditional products. There are ongoing discussions in India about a digital banking license framework, but nothing concrete as of 2025.

Australia: Australia embraced digital bank startups a few years ago (issuing licenses to Volt, Xinja, 86_400, etc.), but it saw some turbulence – Xinja failed in 2020, Volt shut in 2022 returning deposits to customers, and 86_400 was acquired by National Australia Bank. The Australian Prudential Regulation Authority (APRA) had granted these new licenses but also held them to the same high standards as any bank. The lesson was that sufficient capital and a path to profitability are critical. Australia did allow these neobanks to call themselves banks (once licensed). The survivors (like Judo Bank, which focuses on SME lending, and Up Bank which is actually under a bank license via Bendigo & Adelaide Bank) show some success. Crypto in Australia is legal and quite popular, but none of the neobanks integrated it deeply – rather, separate Aussie crypto exchanges (like CoinJar) offer their own cards. The regulatory stance in Australia on crypto is still evolving (they’ve been consulting on which digital assets to treat as financial products, etc.).

Middle East: Some countries in the Middle East (e.g., UAE, Bahrain, Saudi Arabia) have been proactive in fintech. Bahrain licensed a digital bank (Bank ABC’s ila Bank). The UAE has a few digital banking initiatives (like Liv. by Emirates NBD, and startups like YAP). Crypto regulation in the Gulf varies: the UAE is aiming to be a crypto-friendly hub (Dubai set up VARA for crypto oversight), so we might see digital banks there incorporate crypto in the future. Bahrain allowed crypto firms under its central bank’s sandbox. These regions often look to Singapore or Europe for cues on balancing innovation with Sharia compliance and risk.

In terms of regulatory considerations general to neobanks:

Capital and Prudential Requirements: Getting a banking license anywhere means meeting minimum capital requirements, ongoing capital ratios (like Basel III standards), liquidity ratios, etc. Neobanks that become banks must comply just like incumbents. This is why some avoid becoming full banks initially – it’s costly and ties up capital. Regulators are increasingly looking at neobanks’ business models for sustainability, not wanting banks that just burn cash and might fail. By 2025, there’s more scrutiny on whether neobanks can turn a profit and manage risks as they grow. For instance, UK’s regulators asked new banks to improve their lending standards and operational resilience.

Operational Resilience and Security: Regulators worldwide are concerned with tech outages and cybersecurity at digital banks. Many have introduced guidelines requiring robust IT governance, incident reporting, and in some cases, cloud usage guidelines if banks rely on cloud providers. As noted in a Stripe article, regulators are modernizing frameworks to adapt to digital models, but also requiring neobanks to have proper risk controls (e.g., not just relying on a flashy app with no hotline when something goes wrong).

Consumer Protection and Financial Crime: Neobanks must comply with AML/KYC rules and are under the lens for things like fraud prevention. In fact, some neobanks grew so fast that fraud rings tried to exploit their onboarding (e.g., there were cases of identity fraud to open accounts at some neobanks). Regulators responded by examining how well these fintechs verify customers and monitor transactions. There’s also focus on transparency of fees and fair treatment – ensuring that if a neobank isn’t actually a bank (with deposit insurance), the customer is clearly informed. Misleading marketing is a no-go.

Regional Limitations: Some markets simply aren’t open to independent neobanks yet due to regulatory barriers. For example, in many African countries, telecom companies and banks drive mobile money, and independent neobanks are rare outside of partnership models. In Latin America, beyond Nubank, regulators in places like Mexico, Colombia have fintech licenses but also require certain compliance that creates a moat. Neobanks often need to tailor approach by country – in some, they get a license, in others they partner or acquire.

Crypto Regulations: For neobanks offering crypto, they suddenly have to navigate an entirely different regulatory domain. They may need a money transmitter license (US), a crypto asset service provider registration (in EU countries before MiCA, and EU-wide passport under MiCA after), or even separate entity to handle crypto (as SoFi does). Some jurisdictions restrict banks from directly dealing in crypto – for instance, in the US, banks have been wary because federal regulators have not given clear blessing for holding crypto on balance sheet (apart from some very limited cases like custodial services with notice). So, many neobanks contain crypto in a non-bank subsidiary or just partner with an exchange, so that the activity is regulated under the exchange’s licenses rather than the bank’s. This could evolve if, say, banks are allowed to issue stablecoins or hold tokenized deposits; then neobanks might integrate crypto more deeply.

Regional differences summary: Europe fosters cross-border digital banks with a clear, if rigorous, licensing path; the US forces most neobanks into partner-bank models and has separate state-federal hoops, making crypto integration cautious; APAC is a mixed bag – some countries have fully embraced digital banks, others still require partnerships, and crypto policies range from ban to friendly. In all cases, regulation is catching up to the neobank phenomenon, focusing on ensuring these fintech upstarts are safe, well-managed, and truly serving customers without undue risk. As neobanks mature, they increasingly resemble traditional banks in regulatory compliance, even if their front-end experience remains novel.

10. The Future of Neobanks and Their Role in the Crypto-Fintech Ecosystem

Having reshaped retail banking over the past decade, what’s next for neobanks? The future likely holds both challenges and opportunities as these digital banks mature and as crypto & fintech continue to evolve. Here are some key themes outlining the road ahead:

Path to Profitability and Sustainability: Early on, growth was the main metric for neobanks – acquire users, expand to new markets. Now, the conversation has shifted to revenue and profits. Many neobanks have struggled to turn a profit due to low margins on basic accounts. The focus moving forward will be on monetization: introducing lending products (which generate interest income), premium accounts or subscriptions, and other services that produce fees. We’ve already seen some neobanks launch paid premium tiers (Revolut Metal, Monzo Premium) with extra perks to diversify income. As funding from venture capital becomes harder to secure at the scale of previous years, neobanks must become self-sustaining. The positive news is some are getting there – Starling Bank is profitable, Monzo became profitable in 2023, Nubank reported a net profit in 2023 after years of growth-focused losses. The future will see some consolidation: weaker players might be acquired or shut down, while the stronger ones capture more market share (possibly even buying portfolios from competitors). Overall, expect fewer new neobanks launching, and more focus on making the existing ones solid businesses.

Expansion of Services (Super-app Ambitions): Neobanks are increasingly positioning themselves as financial hubs or “super-apps.” They don’t want to just be a place to check your balance – they want to handle all your financial needs, and even beyond finance (e.g., lifestyle offers). This means we’ll see neobanks adding or enhancing products: investments (stocks, ETFs), insurance offerings, budgeting and advice features, e-commerce tie-ins, and of course, crypto capabilities. As one industry analysis noted, success in 2025 and beyond could belong to those neobanks that integrate crypto wallets and exchange features directly into their apps, making digital asset management a native part of banking. Some neobanks might even explore web3 elements like allowing login with your bank ID into decentralized apps or providing custody for tokenized assets. The integration of traditional and crypto finance could deepen – for instance, imagine getting a stablecoin loan or using crypto as collateral for a fiat loan, through your neobank app. Such hybrid offerings could become a reality if regulations allow.

Embedded Finance and Partnerships: Paradoxically, while neobanks aim to get customers to use their app for everything, the concept of embedded finance means banking services showing up in non-bank apps. Neobanks might distribute their services through partners. For example, a ride-hailing app or an e-commerce platform could offer branded banking services to its users, which are actually powered by a neobank’s BaaS platform. Some neobanks (like Starling with its Banking-as-a-Service, or Solarisbank in Germany which is a BaaS provider often considered a type of “white-label” neobank) are focusing on this route. The future might see your bank account being provided by, say, Google or Amazon via partnerships with regulated entities – effectively tech companies becoming neobanks too. In that ecosystem, existing neobanks could either compete or collaborate by powering those accounts behind the scenes.

Globalization vs Localization: We will likely see a split in strategy. A few neobanks will try to be global players (Revolut, perhaps Nubank into other emerging markets, etc.), but many will remain focused on their region or home country where they have a better chance to dominate a niche. Regulation is a barrier to easy global scaling in banking – unlike, say, launching an app worldwide, banks need country-by-country approval. Thus, the future might hold a federation of neobanks: one top player in each major market, sometimes overlapping in regions but each with strengths. However, they might form alliances or interconnect their services. For example, there could be partnerships where a European neobank teams up with an Asian neobank to offer cross-border services jointly. If one day crypto or stablecoins enable more borderless finance, neobanks could leverage that to serve expatriates or global nomads (some, like Bunq, explicitly target “digital nomads” for cross-border banking).

Role in Crypto-Fintech Ecosystem: Neobanks are well-positioned to be the on-ramps and off-ramps for the crypto world. Today, to get money into crypto, many people transfer funds from a bank to an exchange. If your bank is the exchange (or offers one-click access), it simplifies that process. As crypto matures, average consumers might not want to manage separate wallets and private keys; instead, they might trust their bank (if the bank offers insurance, good UX, and recourse for mistakes). Neobanks could collaborate with crypto platforms to ensure compliance while offering customers exposure to digital assets easily. Moreover, neobanks could integrate with decentralized finance in a user-friendly way – for instance, allowing users to earn interest from DeFi protocols, but with the neobank acting as a safeguard or intermediary that abstracts the complexities. Some fintech experts suggest that neobanks who embrace these trends can gain a competitive edge. We might see, for example, neobanks offering stablecoin accounts for faster global transfers. Indeed, several stablecoin issuers (like Circle with USDC) are courting fintechs and banks to use their stablecoin for settlement. A neobank could use stablecoins under the hood to provide near-instant, 24/7 cross-border payments far cheaper than Swift transfers – all while the user just sees a quick transfer in the app.

Competition and Convergence with Traditional Banks: Traditional banks aren’t standing still. The big incumbents have upped their digital game, and some have launched their own digital-only offshoots (for example, JPMorgan launched a fully digital bank in the UK in 2021, called Chase UK, which is essentially competing with Monzo and Starling on their turf). In the future, the line between “neo” and “traditional” will blur. Either the neobanks will have grown to look more like traditional banks (with broad offerings, perhaps even branches or customer service centers as they scale), or traditional banks will have adopted enough neobank-like strategies that to the customer it’s all just digital banking. We already see incumbent banks acquiring fintechs or mimicking their features. The likely scenario is coexistence with some consolidation: a few neobanks might get acquired by larger banks wanting a fresh brand (like BBVA’s acquisition of Simple in the US some years ago, or NAB’s buyout of 86_400 in Australia), while others remain independent and even start acquiring smaller firms themselves (Nubank acquired broker Easynvest and others to expand services). The competitive pressure will ensure better service and lower fees industry-wide, which is a win for consumers.

Regulatory Evolution: Regulators are learning from a decade of neobank experience. We might see more defined frameworks for digital banks, perhaps special bank charters for fintech in the US revived, or more stringent rules on operational resilience. Crypto regulations will significantly influence neobanks’ future with crypto – if clear rules and consumer protections are established, neobanks will be more confident to offer crypto broadly. Conversely, if regulations become very strict (say banning banks from touching crypto assets in some jurisdictions), neobanks may limit those offerings. A hopeful sign is that regulators in many regions acknowledge the role of fintech in inclusion and innovation, so they aim to strike a balance. For example, the European Central Bank has voiced support for innovation but within a stable regulatory perimeter.

New Technologies and Innovation: Neobanks will likely be early adopters of new tech in banking – be it AI, open data, or even central bank digital currencies (CBDCs). AI is already used by neobanks for personalized insights and fraud detection; going forward, AI-powered financial coaches or chatbots could become far more sophisticated, giving users tailored advice on saving, spending, or investing (and doing so proactively). If governments introduce CBDCs (digital fiat currency issued by central banks), neobanks could integrate them quickly as just another currency supported in the app – possibly speeding up settlement and lowering costs further. Neobanks might also leverage biometric security, open finance (beyond banking into all financial data aggregation), and other emerging trends faster than traditional banks, because they tend to have more agile tech teams and less legacy drag.

Evolving Customer Expectations: The next generation of users will expect even more: seamless everything, instant onboarding with any provider, the ability to plug their bank into whatever platform they’re on (think banking through messaging apps, voice assistants, etc.). Neobanks will have to meet users where they are. We may see deeper integration of banking with social media or other daily tools, either through APIs or being part of super-apps. Crypto’s influence here might be that users begin to expect things like instant settlement (since blockchain transactions can be faster than bank transfers) or transparency and control (like being able to see exactly where their money is invested or yield is coming from). Neobanks could respond by adopting some of those blockchain-inspired features even within traditional finance operations.

In the evolving crypto-fintech ecosystem, neobanks are poised to play a central bridging role. They have millions of users comfortable with digital finance, and they can introduce those users to the crypto world in a safer, more user-friendly manner. Conversely, for the crypto industry, neobanks represent trusted channels to bring crypto to the masses under a regulated umbrella. The collaboration between the two could significantly accelerate mainstream adoption of digital assets – for example, one day checking your bank account and seeing not just your cash balance and stock portfolio but also your crypto holdings and maybe your NFT collectibles, all in one financial dashboard.

However, the future will not be without hiccups. We may see some high-profile failures or scandals if a neobank mismanages risk or a crypto integration goes wrong (security breaches, etc.). Each such event will be a test of consumer trust in fintech. Yet, the trajectory so far indicates that digital-first banking isn’t a fad – it’s the new normal. The term “neobank” itself might fade once all banks are essentially digital to the customer. But the spirit of neobanks – innovation, inclusion, and user-centric design – will continue to shape finance. They’ve moved the needle on what customers expect from their financial institutions. And as they incorporate crypto and other fintech innovations, neobanks may well be the ones to finally harmonize traditional finance with the decentralized finance world, creating an ecosystem where moving between fiat and crypto is seamless and the benefits of both are available to users. In conclusion, the future of neobanks is one of integration: integrating more services, integrating with the lives of users more deeply, and integrating the old and new paradigms of money.